Posted June 20, 2013

Appel signing another shrewd move by Astros, who are rebuilding the right way

Houston Astros
Mark Appel

Houston native Mark Appel could be the future ace the last-place Astros desperately need. (AP)

On Wednesday, the Astros officially announced the signing of the overall number one pick in this year’s amateur draft, 21-year-old righthander Mark Appel. Constrained by the bonus pool system that went into effect in 2012 — a system that caused Appel to be bypassed by Houston when it was in the same position last year — he didn’t fare as well as some of his first-pick predecessors. He may even have cost himself money, but even so, he probably helped his cause in the long run.

Appel signed for a bonus of $6.35 million, around 18 percent below the assigned slot value of the pick, $7.79 million, and lower than both 2009 first pick Stephen Strasburg and 2011 first pick Gerrit Cole:

Year  Team  Player Pos  Bonus
2013 Astros Mark Appel RHP $6.35
2012 Astros Carlos Correa SS $4.80
2011 Pirates Gerrit Cole RHP $8.00
2010 Nationals Bryce Harper OF $6.25
2009 Nationals Stephen Strasburg RHP $7.50
2008 Rays Tim Beckham SS $6.15
2007 Devil Rays David Price LHP $5.60
2006 Royals Luke Hochevar RHP $3.50
2005 Diamondbacks Justin Upton SS $6.10
2004 Padres Matt Bush SS $3.15
2003 Devil Rays Delmon Young OF $3.70
2002 Pirates Bryan Bullington RHP $4.00
2001 Twins Joe Mauer C $5.15
2000 Marlins Adrian Gonzalez 1B $3.00

Note that those figures don’t include the values of the major league contracts they may have signed as well. For example, Strasburg’s total package was for $15.1 million, covering salaries for 2009 through 2012, with a $3.9 million salary for 2013 if he didn’t reach arbitration eligibility (which he didn’t).

The $6.35 million is more than Appel was offered by the Pirates after being chosen as the eighth pick last year. The slot value for that pick was $2.9 million, and he reportedly turned down Pittsburgh’s final offer of $3.8 million, instead opting to return to Stanford for his senior year. Appel slipped to eighth because the Astros themselves passed him up at number one when he rejected a pre-draft offer of $6 million. Aligned with überagent Scott Boras, Appel was said to be seeking a bonus in the $7 million to $8 million range, while slot for the pick was $7.2 million.

Under the rules put in place via the Collective Bargaining Agreement adopted in December 2011, teams are allocated a bonus pool amount to which they must adhere when signing picks from the draft’s first 10 rounds; every pick is assigned a slot value, with the highest value for the first pick. Teams can go over the slot value when signing any of their picks, but any team exceeding its total bonus pool by up to five percent pays a 75 percent tax on the overage, and the penalties steepen from there. In the five to 10 percent range, a team loses a first-round pick and pays a 75 percent tax on the overage. At 10 to 15 percent, a team loses first- and second-round picks, pays the 75 percent tax and must take out the garbage at Bud Selig’s vacation home for 26 weeks… okay, the last part may not actually be in the fine print, but it’s still complicated. The point is that a team could blow its entire budget on one pick and not be able to sign any from the other nine rounds.

Rather than pay a slot value bonus for last year’s first pick, the Astros instead drafted 17-year-old shortstop Carlos Correa, whom they signed to a $4.8 million bonus. With the bonus money they saved, they also signed supplemental first-round pick Lance McCullers, a righty with the best velocity of any high school pitcher in the draft, as well as fourth-round pick Rio Ruiz, a third baseman considered a first-round talent coming into the year before he was sidelined by a blood clot. The 2013 Baseball America Prospect Handbook termed the strategy “masterful,” and ranked Correa first, McCullers fourth and Ruiz eighth among Houston’s top 10 prospects.

Considered a front-of-the-rotation talent in the making, Appel will join those ranks next year; here’s what Baseball Prospectus’ Allan Simpson had to say about him in a pre-draft preview:

Appel has the stuff, size, and track record to justify spending a major portion of a team’s bonus pool to acquire his services and appears to be as close to big-league-ready as any prospect in this draft. The 6-foot-5 righty consistently works in the mid-90s and can run his fastball into the upper 90s on occasion. He combines that with a changeup that frequently flashes plus in the mid-80s, and he has a vicious knockout slider that has allowed him to continue to pile up the strikeouts this spring (84 through first 70-1/3 IP).

It’s possible that last year Appel and Boras could have squeezed the Astros for slightly more than he wound up receiving, but not significantly more; via BA’s numbers, they had around $400,000 more to spend before they would have lost a draft pick. This time around, lacking the leverage to return to school for his senior year, Appel had little alternative except to play in an independent league and wait to be drafted again next year, further forestalling a career that’s already begun a year later than it could have. By agreeing to the terms that he did, he’ll get to pursue his career in his native city; even Boras, famed for not granting hometown discounts, conceded that was a factor. From MLB.com’s Brian McTaggert:

Scott Boras, who represents Appel, said the negotiations with the Astros went as smoothly as possible. He said the right-hander signed at his value rather than his slot — a number that was skewed by the fact he was a college senior and was eager to pitch in his hometown.

“I think in this case, the city of Houston and the Houston Astros organization is going to be very pleased with Mark Appel,” Boras said.

What’s more, by agreeing to $6.35 million, Appel left the team an extra $1.44 million to allocate among their other picks, money that may make (or have made) the difference between one or two picks from lower rounds signing instead of returning to school. That should help strengthen Houston’s system, possibly increasing the speed with which the franchise can turn things around, and it casts Appel as a team-minded player instead of a greedy one.

As it is, the Astros have signed all but two of their picks from the first 10 rounds, with 10th-round pick Austin Nicely, a left-handed high school pitcher, receiving a higher bonus than fourth-rounder Conrad Gregor, a first baseman out of Vanderbilt University, in order to lure Nicely away from a commitment to the University of Virginia. More than $1 million under budget, Houston may be able to sign lefty Kent Emanuel, its third-round pick, keeping him from returning to North Carolina for his senior year.

[Update: An industry source pointed out to me that the Astros could also allocate the under-budget money to use towards signing picks beyond the 10th round. For each of those players, bonus money above $100,000 also counts towards the pool, so theoretically, the Astros could spend around $1.1 million to lure a pick at high risk of going to college instead of signing.]

So in the end, while Appel didn’t top Cole or Strasburg (also Boras clients), he did reasonably well under the circumstances,. So did the Astros, who under general manager Jeff Luhnow continue to stick to the gameplan in executing their long-term overhaul.

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